Canadian Employment Law Today

June 3, 2020

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Answer: The phrase "constructive dismissal" refers to a situation where the employee al- leges that the employer's actions repudiate their employment contract. The risk of constructive dismissal claims typically arises where an em- ployer unilaterally changes a fundamental term or condition of the employment relationship. Such changes could be a reduction in wages (generally more than 10 per cent), demotions, significant changes in schedule or duties and even temporary layoffs. COVID-19 has presented unforeseeable and unprecedented challenges to employers. Many have had to cease operations, have seen a de- crease in revenue and have had to assess staffing in a way they have not had to do before. Unfor- tunately, this dramatic change is not something that has been contemplated by provincial em- ployment standards legislation or the courts. Ultimately, employers may have to take mea- sures that might normally be considered con- structive dismissal to stay in business. For exam- ple, a lot of employers have implemented wage reductions, temporary layoffs or work-sharing to survive the pandemic. What is important is that there is no con- structive dismissal if an employee accepts the change. Even if it is constructive dismissal, em- ployees will be viewed as having acquiesced to the change if they do not object in a timely manner. With any negative change, employers can mitigate that risk by doing the following: • Implementing the change in exchange for something positive for the employee. • Giving advance notice of the change similar to reasonable notice of termination. In reality, employers are terminating employ- ment on the existing terms and offering new employment at slightly different terms. This type of notice needs to be carefully worded. • Getting employee buy-in through effective communications. • If the change will not be universally applied to all employees, ask employees for volun- teers. For example, we have heard reports that an employee has favoured a reduction in hours due to the child-care issues that have arisen from school closures. In the present COVID-19 circumstances and the reported two million jobs lost in Canada in April 2020, it is more likely that employees may be willing to acquiesce to fundamental changes if they continue to have a job. Emergency finan- cial measures such as the Canada Emergency Wage Subsidy can help to keep employees. How these programs play into cost reduction mea- sures is a complex and case-specific situation. The best strategy is to be transparent about the reasons behind any change and see if em- ployees object, at which point the employer would need to decide how to respond. Tim Mitchell practises management-side labour and employment law at McLennan Ross in Calgary. He can be reached at (403) 303-1791 or tmitchell@ mross.com. Answer: A layoff is "temporary" in nature and is generally caused by a short-term disruption in business, such as periods of slowdown. A temporary layoff should not be confused with a job elimination or a dismissal. Most Canadian jurisdictions permit employers to impose a tem- porary interruption of employment altogether. The definition of a layoff varies from province to province. Provincial employment standards legislation will specify the formal requirements for conduct- ing a temporary layoff, including: • How much layoff notice is required and in what circumstances can a temporary layoff be conducted without notice. • What the permissible temporary layoff pe- riod is (for example, in Ontario, it is 13 weeks in any period of 20 consecutive weeks). • What happens when the temporary layoff pe- riod expires (usually, the employee is deemed terminated). • What an employee is entitled to during a period of temporary layoff. • How to recall an employee. Employers should be aware that statutory temporary layoff provisions can, in certain cir- cumstances, be replaced by the terms of the employment contract or collective agreement. Particularly, if the contract or agreement includes layoff terms that offer a "greater right or benefit" than the statutory layoff provisions, then that will prevail. Temporary layoffs are not without risk. The term "layoff" in the non-union setting has no technical meaning and is simply a euphemism that connotes loss of employment without attri- bution of wrongdoing to the employee. There is case law in many jurisdictions that supports the notion that the fact that employment standards legislation may authorize temporary layoffs does not affect common law rights and obligations concerning dismissal: see, for example, the Al- berta decisions of Vrana v. Procor Ltd. and Turner v. Uniglobe Custom Travel Ltd. If an employment contract does not specifically provide for tempo- rary layoffs, or if it is unusual for an industry to perform temporary layoffs (such as a retail store versus a construction site), there is always risk that an employee will allege they have been con- structively dismissed. In order to sustain a constructive dismissal claim, an employee would need to be able to demonstrate that the employer intends to no longer be bound by an employment agreement. However, the mere fact that an employer issues a temporary layoff notice is the antithesis to a claim that it no longer intended to be bound by an employment agreement. Further, there is no constructive dismissal if an employee agrees to the temporary disruption in earnings. Ultimately, an employer may be able to con- duct temporary layoffs even if it has never done so before. We generally recommend in such a circumstance that the employer have a candid discussion with the impacted employees regard- ing the business, political or other (such as CO- VID-19) circumstances that have necessitated the need to conduct temporary layoffs; and then ensure that a proper layoff notice is provided that explicitly states that it is a temporary cessation from work. For more information, see: • Vrana v. Procor Ltd., 2003 ABQB 98 (Alta. Q.B.). • Turner v. Uniglobe Custom Travel Ltd., 2005 ABQB 513 (Alta. Q.B.). 2 | June 3, 2020 June 3, 2020 Ask an Expert Have a question for our experts? Email jeffrey.smith@keymedia.com MCLENNAN ROSS LLP, CALGARY with Tim Mitchell First-time temporary layoffs Question: Can an employer temporarily lay off employees due to financial difficulties if it's never done so before? Making pay cuts for business reasons Question: Can extreme circumstances such as the COVID-19 pandemic allow employers to take measures that might normally be considered constructive dismissal to stay in business if employees still object? Canadian HR Reporter, 2020

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